US embassy cable - 04PRETORIA3472

UNCLAS PRETORIA 003472 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAGR, ECON, ETRD, SF, EINV 
SUBJECT: SOUTH AFRICAN GOVERNMENT PROPOSES CHARTER FOR 
BLACK EMPOWERMENT IN AGRICULTURE 
 
1.  SUMMARY:  The South African Department of Agriculture 
released its proposal for black economic empowerment (BEE) in 
the agricultural sector this week.  The draft charter calls 
for major changes in the racial demography of the sector 
within ten years. The vastly white agricultural community 
criticized the proposal, with one group claiming it would 
lead to the collapse of the sector.  END SUMMARY. 
 
 
2.  The South African Government released a draft 
agricultural charter for black economic empowerment (BEE) 
July 26. The charter, known as AgriBEE, sets out targets for 
the country's agricultural sector including 35% black 
ownership of agricultural enterprises by 2008.  The draft 
charter also stated that 50% of agricultural land (a 20 
percentage point increase over the original 30% proposal), 
including that owned by the state, should be available to 
black farmers by 2014.  One provision calls for farmers to 
allocate 10% of their land to farmworkers for their own 
activities.  Farmers will also be expected to procure 70% of 
their inputs from BEE companies by 2015. The transfer of 
farms envisaged by the charter will cost the government no 
less than 50 billion Rand.  The charter applies to "all 
economic activities relating to the provision of agricultural 
inputs, services, farming, processing, distribution, 
logistics, and allied activities that add value to 
agricultural products."  Agricultural Minister Thoko Didiza 
said, "Given the history of injustices in our country, this 
is a means to redress such imbalances." 
 
 
3.  The response of South Africa's predominantly white 
agricultural community to the charter has been overwhelmingly 
negative.  Mr. Bully Botma, Grain South Africa's chairman, 
said that many of the key elements of the document agreed 
upon by by the stakeholders and role-players had been omitted 
whilst many others had been unilaterally introduced, making 
"a mockery of the whole negotiation process."  Pieter Mulder, 
leader of the Freedom Front Plus (a conservative political 
party representing mainly Afrikaner interests), issued a 
statement denouncing the document for "unrealistic 
timeframes, too little emphasis on productivity, and the 
creation of unachievable expectations," and focusing "only on 
quotas."  The Transvaal Agricultural Union (TAU) stated that 
the AgriBEE framework would lead to the collapse of 
agriculture in South Africa, placing the country on the same 
route as Zimbabwe.  They also stated, "Our initial opinion is 
that the proposed framework will destroy the principle of 
property rights and the free market system."  Agricultural 
Business Chamber CEO Tobias Doyer said that the government 
was creating a "very difficult challenge," especially in 
terms of finding the financial capital to reach the targets. 
To put things in perspective, only about 3% of farmland has 
been transferred to black ownership since 1994. 
 
4.  The charter is open to negotiation until November, when a 
final draft will be prepared for ratification by the cabinet. 
 Motsepe Matlala, the president of the National African 
Farmers Union (NAFU), which represents black farmers' 
interests, said he did not think the targets were especially 
tough, "provided that the government worked together with the 
private sector."  However, he was "sure that discussions over 
the next few months may shift the views of the government." 
AgriSA executive director Hans van der Merwe said that the 
first draft is "a point of departure for robust discussion," 
especially as there is no indication in the charter of how 
emerging farmers will receive crucial support.  Democratic 
Alliance agricultural spokesman Kraai van Niekerk suggests 
the charter should follow the example set by the information, 
communication, and technology (ICT) and financial sectors, in 
which private industry was invited to work on the drafts. 
Minister Didiza will appoint a steering committee which will 
"adequately reflect the agricultural sector and the 
government" to undertake consultations regarding the charter. 
MILOVANOVIC